By Dave Gambrel
Coal shippers rarely think about the problems of transporting coal from the ship-loading terminal to the ship-unloading terminal at the destination. Shippers often know little more than the customer’s name or the name of the unloading port. But, should they know more? We are going to take an imaginary ride on a very real vessel whose true name will be withheld; we will call it the Chinese vessel Zhen Zhu (Pearl), a member of the COSCO (China Ocean Shipping Co.) bulk carrier fleet. Zhen Zhu was under way and crossing the Atlantic as this story was being written, expecting to arrive in Mundra, India, 50 days after departure.
A choice between two routes: the short route through Suez or the long route around the Cape of Good Hope, South Africa. At last check, Zhen Zhu was on the latter route.
In late June, Zhen Zhu approached the sea buoy marking the entrance to the Lower Mississippi River, where it was boarded by a bar pilot from Associated Branch Pilots. From the sea buoy, the bar pilot guided the ship 20 miles up to the Head of Passes and Mile Zero on the Mississippi River, where the pilot handed it over to a member of the Crescent River Port Pilots Association. The Carrollton Gauge at New Orleans was reading 12 ft and rising. The COTP (captain of the port) was issuing high water warnings to the river industry, and the pilot was well aware of special safety procedures that had to be observed.
Taking only three days to clear customs and load, Zhen Zhu departed the Lower Mississippi River and took a slight left turn shortly after entering Gulf waters. One of the ship’s Chinese crewmen said to another that he hoped they would take the short route (via the Suez Canal) to India; the other replied he was sure they would take the 3,000-mile-longer cape route. They agreed that if the ship turned left again shortly after seeing Cuba on their right, they would be on the short route. Both were new hires with COSCO and knew little of its history, but they had looked at maps. If they continued past Cuba and passed several more islands, they would be on the long course around the Cape of Good Hope. Neither man knew why the vessel might choose the longer route, but one had heard Suez Canal tolls were very expensive. The other said COSCO was probably worried about pirates, but that did not make sense to him because why would six men in a small fishing boat attack a gigantic boat full of coal?
Hijacked Chinese bulk carrier De Xin Hai seen in this picture was published on the European Union Naval Force Operation Against Piracy website and taken October 19, 2009, off the East coast of Somalia. (Photo: Reuters/Handout/EU NAVFOR)
Why Did Zhen ZhuTake the Cape Route and Avoid the Suez Canal?
Which is the major deciding factor, avoiding expensive Suez Canal tolls or avoiding Somali piracy at the mouth of the canal? Baltic and International Maritime Council (BIMCO) has calculated the extra costs of going around the cape for a container ship and for a very large crude carrier, and has provided a method for the smaller Panamax bulk carriers to compute their costs. Without going through the laborious method of computing costs, the typical cost for larger vessels is about $250,000 in canal tolls, and take BIMCO’s word that the Panamax vessel should be about half that, so about $125,000. It might actually be cheaper to go through the canal, but there is the very real question of whether it would make any difference to COSCO even if the Suez Canal were free. There was good reason to avoid the canal.
The October 19, 2009, hijacking of the De Xin Hai, which is owned by Qingdao Ocean Shipping, a unit of COSCO, was the first known seizure of a coal ship by Somali pirates. The De Xin Hai and its 25-person crew were carrying about 76,000 tons of coal from South Africa to Mundra in India when it was seized in an audacious attack by Somali gunmen, some 700 miles east of the Horn of Africa. It was only slightly larger than its twin, the Zhen Zhu. In late October and again in November, the pirates on board the De Xin Hai threatened to execute its 25, mostly young, sailors if the Chinese military tried to rescue them. The Chinese almost waited too long.
In mid-December, a pirate source onboard the vessel, Hassan, told Reuters, “A helicopter dropped the ransom money onto the ship. We have received $4 million.” COSCO wished the pirates had been more circumspect, but what are you going to do with a bunch of impoverished teenage gunmen?
Before Zhen Zhu left its coal loading dock in the Lower Mississippi, its company officials were meeting in Beijing with members of the China P&I Club, who had been dealing with the larger issue of covering tankers carrying Iranian oil. The vessel’s master had to know his destination before he weighed anchor; he had to report his destination to AIS. He suspected his new route would be the long one rounding the cape, and he was right.
In September 2013, the container ship COSCO ASIA was rocket attacked in the Suez Canal.
A Not-so-gentle Reminder
In their deliberations about ensuring the Zhen Zhu for a late summer’s trip through the canal, the Chinese P&I Club annoyingly reminded COSCO of their COSCO ASIA experience in the canal only two years before, an attack that had nothing to do with Somali piracy. They may have told COSCO, “The recent hijacking of an Egyptian warship indicates a capability on the part of militants in the Sinai Peninsula to operate in the maritime environment and to attack maritime targets, and along with the rocket attack against the COSCO ASIA in 2013, there are indications that a threat may exist to commercial shipping in the area. The general advice must be to exercise increased caution and maintain vigilance particularly when ships are waiting in the approaches to the canal.”
Facing growing concerns about covering Iranian oil ships (China buys about 22% of Iranian oil exports), China P&I took an adamant stance on the question of sending the Zhen Zhu through the canal. In effect, they told COSCO, “If you wish to save a relatively few dollars by trying to sneak a coal vessel by the Somalis when you paid them $4 million ransom five years ago, we will not try to stop you, but we will not give you insurance coverage. You now have both Somali pirates and Egyptian militants trying to get you.” COSCO got the message, and Zhen Zhu was directed for the cape. Zhen Zhu’s master was right, but he would never know why.
The Suez Canal Bridge, which has a 230-ft clearance over the canal and is 2.4 miles long, consists of a 1,300- ft cable-stayed main span and two 1.1-mile-long approach spans. The clearance under the bridge defines the admissible maximum height of 223 ft above the waterline.
Keep That Cautious Focus: Islamic State Targets the Suez Canal’s Big Reopening
Suez Canal security sources warned that on August 6, the official opening of the newly expanded canal, the Islamic State was intending to target the waterway as it pushes further into Egypt. The end of July saw more than 100 people killed in bitter fighting between authorities and Islamic State militants in Sinai. The canal is now on a high alert for attacks.
A new anti-terrorism law is being rushed through and the military government is now viewing supporters of the Muslim Brotherhood from the previous regime in the same context as Islamic State fighters. A security source in Cairo said, “Both Islamic State and the Muslim Brotherhood will do everything in their powers to try and disrupt the opening of the canal next month.”
A new 48-mile-long channel is due to open in August, which will allow convoys to head in both directions of the key waterway for the first time in its 146-year history.
Heading for the Cape of Good Hope on a clear day with calm seas.
Rounding the Cape of Good Hope — A Primer
Approaching the southern tip of Africa, the sea had been so calm there were almost no waves, but that was about to change. Off their port bow, clouds had amassed in one of the scariest storm formations they had ever seen. They were approaching the tip of South Africa from the northwest, and the clouds obscured the area known by mariners everywhere as the Roaring ‘40s. The captain recalled the first time he sailed there, and it had not been pleasant. He thought the time of sailing quiet seas might be coming to a close, and he had better consult the ship’s library and weather forecasts about rounding the cape.
The Roaring ‘40s refers to the belt of ripping westerly winds, aided by the Earth’s rotation, between roughly 40° and 50° latitude in the southern hemisphere. Winds rage in this region as it sits in the transition zone between the more tranquil, balmy subtropics and frigid polar vortex zipping around the South Pole. Pressures and temperatures change rapidly here, driving the winds frequently to more than 30-40 mph, and give rise to storms.
In order to sail around the tip of Africa, Portuguese sailors had to move against two powerful ocean flows: the Agulhas and Benguela currents. The second swiftest current in all the world’s oceans, the Agulhas is deadlier than the swiftest current (the Gulf Stream) because the Gulf Stream moves through open waters of the Atlantic. But the Agulhas travels swiftly between two bodies of land — Madagascar and Mozambique. Furthermore, its waters flow in the opposite direction from which Portuguese ships needed to travel.
Additional dangers include gale-force winds and rogue waves. Winds up to 180 kilometers per hour accompany cyclones, which are common in the spring (September through November). Even more frightening are the deadly changes that occur when the winds shift direction. When the winds begin to blow from the west and southwest (the opposite direction from the current), monster waves up to five stories high are known to occur. There is no way to survive such rogue waves, for even the largest vessels can plummet to the ocean floor without a trace.
In spite of all the horror stories he read about rounding the cape, the captain recalled that literally hundreds of tankers and coal vessels safely pass this way every year, and that this trip should be safe. Before he loaded coal in the Lower Mississippi River, he hauled coal from Norfolk, iron ore from Canada, and crossed the winter Atlantic thrice in ballast. He should not panic just because he was rounding the cape.
Rounding the Cape of Good Hope can be rough at times.
Cargo Insurance, General Average and Piracy
One of the main objectives of this article has been to introduce the shipper to today’s sea hazards, and to the law of general average. The law of general average is a legal principle of maritime law to which all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship cargo to save the whole in an emergency. Now that we have illustrated the possibilities of piracy or ships lost at sea, it can be more easily seen that the job of exporting coal is perhaps riskier than one might have thought.
Is there some possibility that they are still at risk when their coal cargo is at sea in a vessel under attacks by pirates, even though they have taken payment via an irrevocable line of credit? Can they simply wash their hands of it, simply because it has been delivered and they had been paid? Is it absolutely clear that the coal buyer owns the coal when the last ton is loaded on the vessel, or is there some possibility that the coal producer could still find himself in a court of maritime law if something disastrous happened to ship, cargo, crew or all three? It is strongly suggested the coal producer read this and other documents on cargo insurance, then confer with company lawyers and insurance experts before the next vessel is loaded. He should check for tutorial insurance documents that cover piracy, ransom and general average. At the very least, he should learn which P&I club is covering the vessel he is loading, and get on that P&I club’s website to review their concerns.
Dave Gambrel has been the writer of the Transportation Tips column for Coal Age since May 2010. He is also a transportation consultant for all modes of coal transportation. He has chartered many Panamax and Capesize coal vessels, and has written extensively on ocean shipping and terminals, including terminals in China and India. He may be reached at firstname.lastname@example.org.